KUALA LUMPUR (July 25): Nestlé (Malaysia) Bhd's (KL:NESTLE) consensus-beating second quarter results signalled a demand recovery thanks to pricing strategies and as boycott headwinds begin to ease, analysts said, although they remain cautious on its outlook for the second half of the year.
Higher export and domestic sales in the quarter ended June 30, 2025 (2QFY2025) drove a 9.5% year-on-year revenue rise, which reflected a recovery from the boycott that peaked in 2024, according to CIMB Securities and MBSB Research.
The 2QFY2025 revenue of RM1.65 billion and net profit of RM112.1 million were above consensus, according to the analysts' research notes. It brought 1HFY2025's earnings to 61% of the full-year forecast, MBSB Research said.
Higher pricing helped offset elevated cost pressures, said CIMB Securities. Firm exports also reflected Nestlé Malaysia's role as the Swiss food-and-beverage conglomerate's largest halal manufacturing hub, said MBSB Research.
However, CIMB believes the conglomerate's 2HFY2025 results will be slightly weaker than 1H in the absence of festive demand and rising input costs, although MBSB expects "topline momentum to remain steady" on resilient consumer demand.
CIMB, which has a target price of RM86.20 on the stock, however sees "limited downside to Nestlé’s current valuations" on inelastic demand for consumer staples, Nestlé's branding and its diversified product portfolio.
MBSB Research — with a lower unchanged target price of RM77.90 — believes Nestlé's strong brand and continued product innovation could drive growth. “We stay cautious but acknowledge Nestlé’s structural strength and recovery potential,” MBSB Research noted.
Nine out of 14 research houses have the stock on “hold” calls, while two have “sell” and three have “buy” recommendations. The consensus 12-month target price is RM85.86, according to Bloomberg.